Nike's First-Quarter Earnings Preview: What Wall Street's Saying

NEW YORK (TheStreet) -- Nike (NKE) reports quarterly earnings after the markets close on Thursday, and Wall Street is expecting continued momentum in the sneaker company's sales in the U.S. and Western Europe, bolstered by a focus on basketball products and women's merchandise.

That said, analysts are worried that currency challenges in Nike's emerging-markets businesses may keep a lid on the Beaverton, Ore.-based company's sales growth rates. Several analysts pointed to "foreign exchange headwinds" that would put a cap on any upside potential to Nike's sales growth in the quarter.

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Nike is expected to report fiscal first-quarter earnings of 88 cents a share on sales of $7.83 billion after the market closes, according to analysts surveyed by Thomson Reuters.

Nike shares have risen 16.5% over the past 12 months, keeping pace with the S&P 500, which has risen nearly 17% over the same period. Here's what analysts are saying leading up to Nike's earnings.

Andrew Burns, D.A. Davidson (Neutral; $85 PT)

Nike once again a Back-to-School leader, but ancillary headwinds are mounting. We believe NKE's big growth drivers remained intact in F1Q15: North America and Western Europe growth, Direct-to-consumer outgrowth, and strength in the basketball and running categories. Simply put, Nike's biggest regions and categories represent its healthiest businesses at the moment. On the margin, a steeper currency headwind will weigh on reported growth rates, and economic troubles in Russia & Latin America further complicate the global picture. Additionally, a forthcoming increase in marketing spend from Adidas has the potential to stem market share losses for NKE's largest competitor. Lastly, the golf equipment is facing industry challenges. All in, Nike's core business remains quite strong, but we expect the listed headwinds to limit upward earnings revisions.

We expect c.c. futures orders to decelerate for the second consecutive quarter after recently peaking at 14% in 2Q14. Our modeled 10% c.c. futures order estimate would still reflect impressive growth, but would likely raise concerns around the sustainability of NKE's double-digit growth trajectory. With pricing and mix fueling a favorable gross margin tailwind, we will be looking for evidence NKE can reign in SG&A spend to deliver meaningful EBIT margin improvement.

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